Taxpayer funds contributed to the National Disability Insurance Scheme have been used by unreliable providers to pay for drugs, alcohol and holidays.
The dodgy deals were exposed by NDIS head of fraud and integrity John Dardo during a late-night hearing into the scheme’s future funding.
Dardo told the hearing that around $2 billion in NDIS funds were slipping away and being inappropriately spent.
He said dodgy providers were encouraging their customers to use their NDIS funds to pay for luxury holidays, rent, mortgages and luxury cars.
The revelation comes as the government debates how to limit the waste of NDIS funds.
The cost of the NDIS has been forecast to rise to $50 billion by 2025/26, more than the annual cost of Medicare.
Billions of dollars of taxpayer funds sent to the NDIS have been used to unfairly pay for items such as drugs, alcohol and cars, scheme’s fraud chief claims (file image)
Mr. Dardo informed the audience of specific cases where funds used to help those in need were instead used to improve their lifestyle and their own benefit.
“Examples from the last week (include) a $20,000 holiday, a $10,000 holiday,” he said.
“Now, fortunately, when we were able to approach them, they understood not to do it and were willing to give us our money back.”
“But we have other participants… (who) then cease contact and refuse to participate.”
Dardo added that a man with a $480,000-a-year plan would receive $40,000 a month, but would only need $20,000 to pay for his medical problems, while the rest would go toward his mortgage.
He said he spoke with one participant who would meet his provider at an ATM to make his payments.
‘I recently spoke to a participant who would meet the provider at the ATM, the provider would withdraw cash and hand it to the participant for her to obtain illicit substances.
‘We are not talking about dozens or hundreds of participants, we are talking about a significantly larger number. And these are providers who do everything they can to put people at risk and commoditize those participants and their plans.’
He said there were numerous cases where organized crime groups had used fraudulent health reports to enroll people in the program, allowing a steady flow of funds to pay for their substance abuse.
One participant said her supplier would withdraw cash from an ATM and give it to her so she could get illicit drugs (file image).
Dardo said the huge amounts of funding the NDIS received were too attractive to bad actors.
‘The plan was designed with the best intentions; You talk to anyone who was there at the beginning… What no one planned, when there is such a big pot of money there, (is that) it would attract behaviors, risks, things that weren’t there before,’ Dardo said. .
‘It should be easier for money to flow. But it should be easy to flow into good things… and that requires reform. There are weaknesses in the system design that need to be addressed. “We simply cannot process or audit our way out of this.”
NDIS Minister Bill Shorten has acknowledged there are fraud issues in the NDIS.
“I agree that there are problems in terms of fraud in the scheme, but these fraud problems did not start yesterday,” Mr Shorten told parliament on Tuesday.
‘The reality is that this plan was initiated by Labor and then the Liberals came to power and there is no doubt that they increased the size of the plan.
“But the problem with what they did is that I would have to characterize their management of the plan as incompetent and naive.”
He accused the coalition government of allowing the issue to fester when they were in power.
“The only difference between us and the people opposite is that we are doing something to fix the plan, you did nothing,” Mr Shorten said, pointing to the Coalition.
“We continue to solve fraud.”
It reported approximately 500 ongoing compliance investigations, with 20 cases currently being processed in court.
